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Banquo's Ghost
07-12-2006, 09:23
Apparently, Vanuatu is the happiest place to live.

New Economics Foundation report on Happiness Index (http://www.neweconomics.org/gen/uk108thinhappyplanetindex120706.aspx)

UK 108th in new ‘Happy Planet Index’


A new global measure of progress, the ‘Happy Planet Index’, reveals for the first time that happiness doesn’t have to cost the Earth. It shows that people can live long, happy lives without using more than their fair share of the Earth’s resources. The new international ranking of the environmental impact and well-being reveals a very different picture of the wealth, and poverty, of nations.

The Happy Planet Index, an innovative new index from nef (the new economics foundation) launched on Wednesday 12 July 2006, is the first ever index to combine environmental impact with well-being to measure the environmental efficiency with which countries provide long and happy lives. The results are surprising, even shocking. The ranking unmasks a very different world order to that promoted by self-appointed global leaders, the G8. For example, the UK is a disappointing 108th and the USA fares still worse at 150th on the Index.

nef’s report, The Happy Planet Index: An index of human well-being and environmental impact, published in association with Friends of the Earth, moves beyond crude ratings of nations according to national income, measured by Gross Domestic Product (GDP) to produce a more accurate picture of the progress of nations based on the amount of the Earth’s resources they use, and the length and happiness of people’s lives.

The Happy Planet Index (HPI) strips the view of the economy back to its absolute basics: what we put in (resources), and what comes out (human lives of different length and happiness). The resulting Index of the 178 nations for which data is available, reveals that the world as a whole has a long way to go. In terms of delivering long and meaningful lives within the Earth’s environmental limits - all nations could do better. No country achieves an overall ‘high’ score on the Index, and no country does well on all three indicators.

“It is clear that no single nation listed in the Happy Planet Index has got everything right. But the Index does reveal patterns that show how we might better achieve long and happy lives for all, whilst living within our environmental means. The challenge is - can we learn the lessons and apply them? Governments the world over have been concentrating on the targets for too long. If you have the wrong map, you are unlikely to reach your destination”, says Nic Marks, head of nef’s Centre for well-being.

The HPI shows that around the world, high levels of resource consumption do not reliably produce high levels of well-being (life-satisfaction), and that it is possible to produce high levels of well-being without excessive consumption of the Earth’s resources. Key findings of the Index are:
Self appointed world ‘leaders’ – the G8 - score generally badly in the Index: The UK comes a disappointing 108th – with the remainder of the G8 faring little, if at all, better. Italy is 66th, Germany 81st, Japan 95th, Canada 111th, France 129th, United States 150th and Russia 172nd.
The UKmanages only 108th place in the Index: Just below Libya, but above Laos. The UK’s heavy ecological footprint, the eighteenth biggest worldwide, is to blame. But well-being in the UK is also unspectacular for a Western nation: it is beaten by countries such as Germany, the US, Costa Rica, Malta and, in top place, Switzerland.
Central Americais the region with the highest average score in the Index: The region combines relatively good life expectancy (an average of 70 years) and high life satisfaction with an ecological footprint below its globally equitable share. Central America has had a notorious history of conflict and political instability, but the last 15 years have been relatively peaceful, which perhaps, with traditionally high levels of community engagement, explain its success.
Countries classified by the United Nations as ‘medium human development’ come out better than both low and high-development countries: Only one ‘low-development’ country has a strong HPI score, whilst 21 per cent of countries classified as ‘highly-developed’ do. However, 44 per cent of countries with ‘medium-development’ score well. This is because, beyond a certain level, vastly increasing consumption fails to lead to greater well-being.
Well-being is not based on high levels of consumption: For example, Estonia - with high consumption - rates poorly on well-being. And, in the Dominican Republic where well-being is high, consumption is not above a globally equitable share.
Life satisfaction varies wildly country by country: Questioned on how satisfied they were with their life as a whole, on a scale of 1-10 (1 being ‘dissatisfied, 10 ‘satisfied’), 29.4 per cent of Zimbabweans rate themselves at 1 and only 5.7 per cent rate themselves at 10. By contrast, 28.4 per cent of Danes rate their satisfaction with life 10/10, with less than one percent rating 1.
Life expectancy also varies wildly: Babies born in Japan can expect to live to 82, but only to 32 and a half if born in Swaziland.
Overall, we are over-burdening the Earth’s currently available biocapacity: By consuming 22 per cent above our ecosystems’ ability to regenerate we are eating into and degrading the natural resources that our life-support systems depend on. In the process we are depleting the environmental goods and services that future generations will depend on, with potentially devastating consequences.


“We are used to comparing countries in terms of crude riches or what they trade. There are international league tables for performance on issues from corruption to sporting success. But, nef’s Happy Planet Index measures something much more fundamental. It addresses the relative success or failure of countries in giving their citizens a good life, whilst respecting the environmental resource limits on which all our lives depend. The order of nations that emerges may seem counter-intuitive. But this is because, to a large degree, policy makers have been led astray by abstract mathematical models of the economy that bear little relation to the real world,” says Andrew Simms, nef’s Policy Director.

Some of the most unexpected findings concern the marked differences between nations, and the similarities among some groups of nations:
Island nations score well above average in the Index: They have higher life satisfaction, higher life expectancy and marginally lower Footprints than other states. Yet incomes (by GDP per capita) are roughly equal to the world average. Even within regions, islands do well. Malta tops the Western world with Cyprus in seventh place (out of 24); the top five HPI nations in Africa are all islands; as well as two of the top four in Asia. Perhaps a more acute awareness of environmental limits has sometimes helped their societies to bond better and to adapt to get more from less. Combined with the enhanced well-being that stems from close contact with nature, the world as a whole stands to learn much from the experience of islands.
It is possible to live long, happy lives with a much smaller environmental impact: For example, in the United States and Germany people’s sense of life satisfaction is almost identical and life expectancy is broadly similar. Yet Germany’s Ecological Ecological footprint is only about half that of the USA. This means that Germany is around twice as efficient as the USA at generating happy long lives based on the resources that they consume.

As the HPI clearly demonstrates happiness doesn’t have to cost the Earth. It also reveals that there are different routes to achieving comparable levels of well-being. The model followed by the West can provide widespread longevity and variable life satisfaction, but it does so only at a vast and ultimately counter-productive cost in terms of resource consumption.

“The UKeconomy hoovers up vast quantities of the world’s scarce resources, yet British people are no happier than Colombians or Guyanese, who use far fewer. The current crude focus on GDPis outdated, destructive and doesn’t deliver a better quality of life. The UKeconomy must get much smarter and greener,” says Simon Bullock, Friends of the Earth’s economics co-ordinator.

nef proposes a Global Manifesto for a happier planet, outlining how we might begin to both live within our environmental limits and increase well-being. Necessary first steps include:
Eradicating extreme poverty and hunger. Increasing material wealth in ‘developed’ countries does not lead to greater happiness, while in ‘developing’ countries extreme poverty systematically undermines people’s opportunities to build good lives for themselves and their families. We urgently need to redesign our global systems to more equitably distribute the things people rely on for their day-to-day livelihoods, for example: income, and access to land, food and other resources.


Supporting meaningful lives. Governments should recognise the contribution of individuals to economic, social, cultural, and civic life and value unpaid activity. Employers should be encouraged to enable their employees to work flexibly, allowing them to develop full lives outside of the workplace and make time to undertake voluntary work. They should also strive to provide challenges and opportunities for personal development at work.


Identifying environmental limits and design economic policy to work within them. The ecological footprint gives us a measure of the Earth’s biocapacity that, if over-stretched, leads to long-term environmental degradation. Globally we need to live within our environmental means. One-planet living should become an official target of government policy with a pathway and timetable to achieve it. (The UK currently consumes at just over three times this level. If everyone in the world consumed as we do in the UK, we would need 3.1 planets like Earth to support us.)

But perhaps most importantly, nef calls for political organisations to embrace and apply new measures of progress, such as the HPI and properly adjusted GDP measures. Only then will we be equipped to address the twin challenges of delivering a good quality of life for all whilst remaining within genuine environmental limits.

Actually, having worked there for a while backalong, it is lovely place. I'm not sure it will stay so if downshifting Yuppies turn up en masse though :grin:

thrashaholic
07-12-2006, 09:53
I fear I must raise a rather gigantic eyebrow to those 'findings', I'm positive I can smell the unmistakable whiff of political motivations...

"...those who argue that GDP should account for environmental costs or unpaid work are more concerned to make environmentalist or feminist arguments than to enhance the integrity of national accounting frameworks.

GDP and other economic measurements are likely to be of greatest use to a wide range of users if as far as possible the measurement relates to issues of objective fact. Users can then modify these measures to reflect their own particular requirements. The pursuit of objectivity and comparibility is preferable to repeated modification in pursuit of a concept of accuracy which is both subjective and elusive." - 'The Truth About Markets' by John Kay

What I think we must remember is that the concept of hapiness is a very relative one, for example I can get clean running water in my house now, whereas in the past and in some parts of the of the world that's a luxury. Am I happier because of it? Probably not (everyone around me has it too). Is my standard of living higher because of it? Without doubt.

I suspect that the NEF had a point to prove before they conducted their study and then, what a surprise, their study proved their point perfectly.

I'll stick to GDP per capita.

macsen rufus
07-12-2006, 11:54
GDP was invented as a production planning tool for a war economy and was never intended to be used in peace time. It's very misleading when used as the bottom line for "how well are we doing?".

As an example, 9/11 added hugely to the GDP (insurance, rebuilding, healthcare costs, emergency service wages etc etc) - but that doesn't make it a good thing. If you run an economy on the principle that maximised GDP is all that counts, it's like driving a car to the rules of "always accelerate, never steer, and ignore the map". Crazy - "well, we've travelled a hundred miles at 55mph, we must be where we wanted to go".

NEF do have an agenda -- develop a system of public accounting that's more useful than GDP-only. At the end of the day we are human beings not "economic units". As individuals we all have things that we wouldn't exchange for any amount of money. So why behave like that collectively?

GDP treats resource inputs as income rather than capital items. eg oil -- which will run out. Does GDP accounting allow for any depreciation of stocks? No. How more "objective" can you get? :sarcasm:

GDP fails to recognise the value of natural systems, eg the cooling and air-condtioning effects of forests, water cleansing by wetlands etc. If these services were attempted by our "efficient" industrial equivalents we'd go broke overnight. There is no way we could afford to replace them technologically, yet the GDP value of these is zero, even negative because someone could be making a short-term profit by destroying them. These environmental services are HUGELY valuable to our economy, but because of GDP accounting we are forced into "rational economic decisions" that really are akin to cutting off your nose to spite your face.

GDP is outdated and counter-productive, and seriously needs to be replaced by a better multidimensional "bottom line".

thrashaholic
07-12-2006, 12:53
GDP is a measure of output (or income or expenditure if you're that way inclined - they're all the same anyway), other than the obvious statistical difficulties faced in gathering the data, which can be overcome, I fail to see how one could get a more objective measure of what an economy is producing. What GDP isn't is a measure of wealth, untapped resources aren't 'being produced' so aren't in GDP, and that seems perfectly reasonable to me:

If I had a loom, but wasn't using it to produce cloth, I wouldn't add my potential income from the cloth I haven't made to the income I'm actually receiving. Likewise with GDP.

The trouble with any 'better multidimensional "bottom line"' is that the component parts would have to be weighted and that weighting imediately makes the measure subjective and thus useless. How does one put a financial value on what the rainforests do (although in reality they do relatively little oxygen production etc. when compared to, say, algae), a finacial value on the process of photosynthesis?

Of course in a 'perfect' theoretical system it can be done (everything has a value), but in reality any attempt to 'correct' GDP is guesswork. Likewise with this hapiness index, no doubt it involves weighting, weighting calculated by people, people with political persuasions they want aired, political persuasions that get aired by their weighted index... Incredibly useful for economic analysis I'm sure you'll agree...:juggle2: (I refer you once again to the quotation in my previous post by the noted economist and Fellow of St John's College, Oxford, John Kay)

On point I will agree with you on though is the problem of short term decision making, since it invariably leads to trouble. This is why we should targetting low-inflation, high-stability economies with objective and accurate national accounting figures, so that people can utilise the better information and stability to make more accurate long term economic decisions that should help benefit the economy and general welfare in the future.

macsen rufus
07-12-2006, 16:42
How does one put a financial value on what the rainforests do (although in reality they do relatively little oxygen production etc. when compared to, say, algae), a finacial value on the process of photosynthesis?


Only by substitution - hence the reference to environmental services. We can estimate the cost of so many million tons of cooling or oxygen production or water purification or land drainage by other means. But being as these are currently valued at zero, any estimate, no matter how subjective, will be closer. Even so, acreages etc can be assessed objectively and consistently enough to provide an indicator of whether trends are improving or not, or provide data such as "at this rate we will run out of (factor x) in 10, 20, 200 years" whatever.

Other factors, such as life expectancy, literacy rates, infant mortality can also be assessed objectively, and again provide indicators of whether we are doing better or worse than last year.


GDP is a measure of output

or an aggragate amount of money changing hands. But it doesn't distinguish between, say £1 billion worth of pulmonary healthcare provision or £1 billion of cigarette production, but these two have obviously very different impacts on the real economy, despite showing exactly the same in GDP. My point is that GDP is too blunt a tool, and is not sufficient for guiding public policy. It needs to be finessed. And the economic contribution made by environmental services and the social sphere (eg unpaid work) needs to be recognised before that contribution is eroded and we discover too late how much we depend on it. It's a case of "What can't be counted, doesn't count", and I'd rather have a guesstimate than a tacit blind-eye.

edit: sp.

thrashaholic
07-12-2006, 18:44
Macsen Rufus,

The trouble with estimating for the value of the environment is that whatever guess is made will be wrong. One could measure the value added in the process of photosynthesis as such: value of the process of photosynthesis = value of a unit of carbon dioxide + the value of a unit of water + the value of a unit of the sun's radiated energy - the value of a unit of oxygen - the value of a unit of sugar; however the result, not only being impossible to calculate in reality, would prove negligable and on aggregate over time I suspect the figure would remain fairly constant. The trouble with 'refining' GDP figures would be that we would in fact be skewing them with wild guesses and our own subjective political judgements.

For example: let's say I am the president of the society for putting things on top of other things. The act of putting a thing on top of another thing 'creates' value, so to make GDP 'more accurate' I would demand that everyone took into account of the economic impact of putting something on top of something else. Of course there is one, but this 'correction' doesn't help anyone trying to measure the activity of an economy in any tangible way, and the 'guesstimate' that I'd use as president of the society would no doubt be over-estimated to prove the 'true' economic worth of my society and the action of putting things a bit higher up than they were before.

If someone wanted to measure the economic and welfare impact of trees or whatever they are by all means entitled to do so, and of course in cost/benefit analysis one ought to take externalities into consideration, but discounting GDP out of hand is bally silly because they are the only objective way of measuring output/income/expenditure (all equal). And you're correct, GDP per capita isn't the only way of measuring welfare, however it is the best way of measuring how well-off people are finacially, which is a measure of their welfare. All figures have their limitations, but objective figures are far more useful because the analyst can be sure that they are accurate for what they are, not given wieghtings based on the personal preferences of who-ever compiled them.

Papewaio
07-13-2006, 02:58
From their PDF document...

HPI = Life Satisfaction x Life Expectancy / Ecological Footprint

HPI = A subjective x a specific with a large distribution / subjective

HPI as they stats is a measure of the ecological efficiency of delivering human well-being.

macsen rufus
07-13-2006, 10:24
With regard to the trees, algae etc, although we can't estimate a cost for how THEY convert CO2 to O2, we can substitue a figure -- an accurate and objective figure -- for the cheapest possible way that WE could do it with our best available technology - chemical facilities have very definable costs. Ditto for the air purification service they provide (dust deposition etc), and any other function from which we benefit. That gives a minimum economic value of the service provided by green plants. (Not that I'm arguing that the green ones are actually substitutable -- I'll leave that argument for the economists to make.) But this gives a clear and objective item in the accounts.

Likewise the contributions of unpaid work can be substituted with quite definable alternatives - how much would it cost to employ people to do the same work at (undoubtedly) national minimum wage?

Hmm, and the 'society for putting things on the same level' springs to mind, too. Assuming they get paid the same rates as putter-uppers, we can double GDP by having one worker putting up and another taking down. In the end nothing has changed, but wow, look at the rise in GDP!

What's most telling is that the guy who invented GDP (whose name escapes me now) was by the 1960s warning against it's shortcomings as a system of national accounting. And no sane business would use just its turnover figures for accounting.

(Someone ought to assess the value of work time spent online in forum discussions, too. Better go and contribute to the general economic wellbeing, as much as I enjoy the debate :2thumbsup: )